Last night the USDA released their February WASDE report. The focus was mainly on South American production, which was cut, but nowhere near as much as the trade thought. Coupled with building US wheat stocks, the report was viewed as another bearish nail in the commodity coffin.
Global ending stocks were trimmed slightly on improved
consumption for corn and wheat, but bean stocks increased on static Chinese
demand and slowed US export business. As
always there will be questions and arguments for and against the USDA
figures. Brazilian consultancy earlier
trimmed Brazil’s soybean crop to 149mmt, while the USDA cut production to
156mmt, from the previous estimate of 157mmt.
Wheat markets came under pressure last night as global cash
markets crumbled in the face of cuts to the official Russian FOB value. The
Russian Ag Ministry now seems to accept that global competition for wheat
business is red hot and dropped the official ‘minimum’ price to US$235/t FOB.
Private trades are regularly setting the bar even lower, but it was the new
offical figure which saw wheat prices across the various trading platforms hit
new seasonal lows.
We are likely to remain in this narrow trading range for at
least another month. As we move into March and April, we’ll start to get a
handle on the South American safrinha (second) corn crop and the start of the
US row crop planting period. It will be interesting to watch price action
across the three major commodities as the annual ‘fight for acres’ progresses,
not to mention if the forecast La Niña rears its head.
Next week
The US remains a high-priced island and will likely struggle to meet export forecasts. India is emerging as something of a wildcard with wheat ending stocks at the lowest in 15 years, wheat area is up this year as the Government tries to rebuild the critical food staple. With the recent dip in prices, don’t be surprised to see importers re-engage the market which may offer some support.
Faba beans have become a popular break crop in southern states, delivering not only a valuable export or feed commodity, but also giving nutritional benefits
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In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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Another nail in the coffin?
Next week
The US remains a high-priced island and will likely struggle to meet export forecasts. India is emerging as something of a wildcard with wheat ending stocks at the lowest in 15 years, wheat area is up this year as the Government tries to rebuild the critical food staple. With the recent dip in prices, don’t be surprised to see importers re-engage the market which may offer some support.
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Data sources: Reuters, USDA, AHDB, Next Level Grain Marketing, Mecardo
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Geopolitics and shorts weather
Amazing the difference a week can make. It all started last Friday morning, with continued escalations in the Middle East. The wheat market jumped 20
Exchange rates helping wheat values
The exchange rate has been in the news lately, with the Australian dollar falling to a six-month low last week. Given this, we thought it
Argentina dealt a cruel hand
It has been a relatively benign week in the wheat market. Some of the risk premium that had built up over Middle East concerns has
Performance from pulses
Faba beans have become a popular break crop in southern states, delivering not only a valuable export or feed commodity, but also giving nutritional benefits
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.